18 March 2013

Fanatics Who'll Do Anything To Save The Euro

Asked why he stole from banks, the
American robber Slick Willie Sutton is supposed to have replied,
‘because that’s where the money is’.

Eurozone
leaders have made the same calculation. Ever since the debt crisis
struck, it was clear that, sooner or later, savers would be gouged.

Until
now, this gouging has mainly happened through quantitative easing,
inflation and record low interest rates. But, in Cyprus, such measures
weren’t enough.

Angry Cypriots are asking why they are the first bailout (out of the five thus far) in which depositors have been scalped

The move, which could see up to ten per cent of
bank deposits seized, sparked panic and violent protests. One
disgruntled customer parked a bulldozer in front of a bank in the
coastal town of Limassol in protest

Over a bank holiday weekend, the
government suddenly announced that, in order to qualify for an
£8.7billion EU bailout, it was confiscating 6.75 per cent of the value
of all bank deposits, and 9.9 per cent of those of more than 100,000
euros.

Cypriots are, not
unnaturally, furious. Theirs is the fifth eurozone bailout, after
Greece, Portugal, Ireland and Spain. In none of these cases were
depositors scalped. Why, angry crowds were demanding outside the
presidential palace in Nicosia, should they have been singled out.

The
official answer in Brussels is that Cyprus is unique because of the
size of its banks as a proportion of its overall economy and the amount
of overseas money in those banks.

It’s true, Eurocrats concede,
that Cyprus’s economy is tiny, accounting for just 0.2 per cent of the
eurozone. But the patience of the donor countries such as Germany is
wearing thin.

Cyprus is seen by many Northern Europeans as a sunny place for shady people. As much as half the money in its banks is Russian.

Rather than admit that the euro was a mistake,
Eurocrats are prepared to pay a terrible price. Or, rather, they are
prepared to inflict a terrible price

It is one thing to ask German MPs to
cough up to save the euro; quite another to ask them to hand their
constituents’ money to the oligarchs who frequent Cyprus with their
bodyguards and peroxided molls.

The trouble is, of course, that there is no way to distinguish between the Russian ‘biznesmeni’ and everyone else.

Only last month, the President of the European Commission, Jose Manuel Barroso, declared that the euro crisis was over

Ordinary savers and pensioners –
the people who did the right thing, the people who had provided for
themselves so as not to have to look to the state – are being
expropriated along with the gangsters.

A
good number of British pensioners are among them: Cyprus is a
Commonwealth country, and as many as 60,000 British savers may be
affected by the toll.

Not
everyone with more than 100,000 euros in the bank is a Russian
money-launderer. One British restaurateur, who was in the middle of
moving house, is reported to have lost 20,000 euros. He, like everyone
else, can now put a precise figure on the price of propping up the euro.

Cypriot President Nicos Anastasiades is trying
to rally support, but if he can't the country may crash out of the
single currency

EU spokesmen are assuring anyone who will listen that Cyprus is a special case, that it sets no kind of a precedent.

But
why should anyone believe them? If you had savings in a Greek, Spanish,
Portuguese or even Italian bank, what would you now do?

Although
there has been a gradual winding down of bank deposits in all those
countries, with property in central London being snapped up and funds
transferred to Switzerland, there has so far, surprisingly, been no bank
run.

That may be about to change. No one really believes Eurocrats when they insist that Cyprus is a one-off.

People queue to use an ATM machine outside of a
Laiki Bank branch in Larnaca, Cyprus on Saturday as it is revealed as
many as 60,000 British savers may be affected by the toll

Morgan Stanley yesterday described the
bailout as a ‘worrying precedent with potentially systemic
consequences’. This is about as close as a bank will ever come to
saying, ‘Panic! Panic!’

Eurocrats
have lost all credibility on this subject. Every single bailout,
including this one, was preceded by sonorous assurances that it wouldn’t
happen.

The underlying
financial situation, we kept being told, was strong. Only last month,
the President of the European Commission, José Manuel Barroso, declared
that the euro crisis was over.

Yet again, the ‘experts’ have been
spectacularly wrong. Not only the Eurocrats, but the central bankers,
the economics graduates who write for the Financial Times and all the
other clever-clogs who backed the bailout-and-borrow racket have been
awry in their predictions.

Meanwhile,
the eccentrics who kept their money out of banks, the handful of
Austrian School economists and the bearded survivalists who kept telling
us to buy gold have been proved right.

Cyprus' Finance Minister Michalis Sarris
defended the decision to accept the levy, saying it was either that or a
complete economic meltdown

In Cyprus, the cost of the euro can
now be tallied in precise figures. Elsewhere across the Mediterranean,
it must be reckoned in unemployment, poverty and emigration.

Our masters in Brussels are prepared to immiserate the continent rather than allow an orderly unbundling of the euro.

Justifying
the confiscation of savings in Cyprus, Joerg Asmussen of the European
Central Bank explained that it was necessary to prevent ‘worries over
the reversibility of the euro resurfacing’.

Got
that? Rather than admit that the euro was a mistake, Eurocrats are
prepared to pay a terrible price. Or, rather, they are prepared to
inflict a terrible price – for, while savers and workers around Europe
are being punished, they have ensured that their own pay and perks are
secure.

What is the alternative? Cyprus, and the other afflicted states, should be allowed to default, decouple and devalue.

Imagine that every Cyprus beach resort
suddenly became 40 per cent cheaper. Would that influence your holiday
choice? Now imagine every business making a similar calculation when
sourcing supplies.

The
least bad option for a country in Cyprus’s condition is to price its way
into the market and export its way back to growth. But that would mean
giving up on the dream of a European federal state.

Do
you remember that, when the euro was launched, we were told it would
add 1 per cent to its members’ growth every year in perpetuity?

As
recently as four years ago, when the credit crunch hit, the
anti-British leader of the Euro-liberals, a former Belgian president
called Guy Verhofstadt, was sneering that the UK would soon be begging
for permission to join.

Now
we see the truth. The dream of political union matters more to Europe’s
governing caste than the well-being of the people they represent. Shame
on them.